I wonder if part of it is maybe in the difference that I use a CRT at 640x480, and as far as I know, you're using an LCD at 1920x1200. You're almost forced to run native, which itself almost pretty much forces you to run in a window, probably a "larger" resolution size one (running outside native, or fullscreen at 1920x1200, either will be a mess). To me, with the setup I use, the backdrops look exactly as smooth as it originally did on the console, which is by no means too blurry to me. It's not HD, no, but it's not too blurry because of that either.
Or perhaps I just can't stand the pixelated look that much. It absolutely destroys one of the best parts of the visuals. When I first started emulating (this game), I ran at 1024x768, and I got about halfway through the game before I was fed up with it. I really don't see how people can play at something crazy like 1680x1050 fullscreen and think it actually looks good. Then again, most people emulating probably haven't played it before, and probably don't own the game, so they don't know what to compare it to, or what they're missing, and so on.